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The Residential Side Has Fallen Off A Cliff

A report from the Sydney Morning Herald in Australia. “A small group of private certifiers have signed off on 130 buildings with compliance problems, including allowing residents to move into one property that did not have toilets or taps fitted. The role of private certifiers in the state’s building standards crisis is under mounting scrutiny, after apartment buildings at Mascot, Sydney Olympic Park, Zetland and Erskineville were abandoned over safety concerns.”

“The Owners’ Corporation Network, the peak body for apartment owners, said the repeat offending was further evidence of ‘deep systemic problems’ in the industry. ‘It is symptomatic of a government that has forgotten how to regulate,’ chairman Phil Gall said.”

From ABC News. “The recessionary conditions in construction have deepened, with the industry experiencing the sharpest decline in activity in six years. Ai Group head of policy Peter Burn said the problems were most acute in residential building, while there was a continued drop in commercial construction.”

“Builders are also being squeezed by tighter profit margins, with the selling prices index continuing to contract in July. ‘This negative reading indicates that rising input prices and other costs are not, on average, being passed on to customers, as profit margins continue to be squeezed for businesses in the construction industry,’ Dr Burn said.”

From Domain News. “House prices in some of Melbourne’s most popular suburbs have dived over the past year. In trendy Northcote, for example, the median house price dropped 11.9 per cent to $1,171,250 over the 12 months to June, according to the latest Domain House Price Report. A similar pattern held in Brunswick, where the median house price fell 11.6 per cent to $972,500 over the same timeframe.”

“‘We’ve seen that in Melbourne, that the more expensive areas and suburbs have seen bigger price falls during the correction,’ Domain economist Trent Wiltshire said.”

From 7 News. “A profit warning from cement maker Adelaide Brighton has highlighted weak conditions in the once-strong construction sector and pounded share prices across the industry. ‘The sector should be doing well in this environment on the infrastructure side, but certainly the residential side has fallen off a cliff,’ said Daniel Cuthbertson, managing director at Value Point Asset Management.”

“Diana Mousina, senior economist at AMP Capital expects activity to fall further still, as infrastructure projects are completed and home starts hold low – adding pressure to Australia’s creaking economy. ‘There’s still weakness to go,’ she said. ‘We think that there might be about 60,000 job losses related to the downturn in housing.'”

From My Business. “A weaker economy appears to be flowing through to business debts, with one credit insurer reporting a major surge in the number of Australian firms making insurance claims for unpaid invoices. The latest NCI Trade Credit Risk Index, a quarterly survey of credit risks for Australian businesses, recorded a 50 per cent jump in the number trade credit insurance claims made between the March and June quarters this year.”

“‘An increasing number of Australian businesses are struggling to pay their debts on time or at all, which in turn places increasing cash flow pressure on the businesses they owe,’ said Kirk Cheesman, managing director of NCI Trade Credit Solutions. ‘According to our latest findings, business conditions for bad debts have hit their riskiest level in three years, so unfortunately, businesses need to consider the possibility of non-payment from their suppliers as insolvency activity rises.'”

From Yahoo Finance. “‘The Australian construction industry is critically ill and if you’re the owner of an apartment within a medium- to high-density building that was constructed within the past 20 years, you’ve contracted Australian real estate’s equivalent of the bubonic plague,’ said the head of research at property market research firm Propertyology, Simon Pressley.”

“‘There’s no vaccine for this horrible disease and the best treatment is most likely to sell sooner rather than later,’ he said. ‘Same-same, mass-produced Lego buildings, appalling governance within the Australian construction industry, embarrassingly poor-quality workmanship, and approximately 40 per cent of the purchase price of a new property representing assorted taxes is a toxic combination.'”

“While there are issues facing the Australian apartment market, panicked selling is not a good idea, the chief economist of realestate.com.au, Nerida Conisbee told Yahoo Finance. ‘I don’t think it’s a good time now to sell if you’re in the market, unless you have to, obviously,’ she said. ‘I don’t think panic selling is ever a good thing.'”

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This Post Has 26 Comments

  1. FYI, I’ve having some web work done and it’s causing problems so comments should be suspended until I can work it all out.

    2. I’m guessing that means I may need to tweak the JTExtension after the changes keep through. I’ll do my best to fix any issues quickly.

      1. I’m going to let a few of these comments through to help diagnose the problem. Please let me know if posts are showing up as normal. I don’t know what’s wrong but we’ll sort through it.

      2. The ad banner at the bottom of my Android phone screen now appears 1/4 inch thick and blocks the JTExtension.

        And it looks like risk assets are setting up for another Friday dump. Time for bulls to HODL and pray!

  3. she said. ‘I don’t think panic selling is ever a good thing.’”

    Of course not. Ride the turd to the bottom of the well.

    A CO without toilets. Amazing.

    1. Brown envelopes seem to make the housing world go round in Australia. It’s been that way for a good 20 years in the US.

  4. Although this not the topic of this thread

    I’m in Boise and work for a real estate attorney and I’m seeing a lot, I mean a lot of lien claims filed. I’m pretty much doing them.

    Mostly against senior living ventures

    1. Hi Norma, thanks for the boots on the ground info. Is your comment showing up as it should?

      2. This is so wrong. What I’m seeing in businesses incorporating in Idaho for the last two years.

        Showing up on social media

        All of them are from California, Oregon or Washington &

  7. Now the Google ad banner is 3/4 inch thick. I hope the Trump administration sues these monopolists and shuts their asses down.

  8. CR8R

    Markets
    Stocks Fall on Trade Worries; Italian Bonds Tumble: Markets Wrap
    By Todd White
    August 8, 2019, 2:44 PM PDT
    Updated on August 9, 2019, 3:35 AM PDT
    – U.S. equity futures retreat; Treasuries climb with gold, yen
    – Pound weakens after U.K.’s surprise economic slump; oil climbs

    U.S. equity futures fell with European shares while Asian stocks were mixed as positive sentiment from a strong day on Wall Street was offset by resurfacing trade tensions. Italy’s sovereign bonds tumbled as the government coalition teetered.

    Contracts on all three major U.S. gauges retreated. The Stoxx Europe 600 index’s decline was led by automaker shares and a more than 2% drop in Italian stocks, with the nation’s debt also slumping on the prospect of snap elections. Asia stocks were up overall, though Shanghai equities finished lower for the seventh time in eight sessions, and Hong Kong shares fell. Bloomberg reported the White House is holding off on licensing decisions for American companies to restart business with Huawei Technologies after Beijing said it was halting purchases of U.S. farming goods. China’s yuan weakened.
    …

    1. Got shrinkage?

      The Financial Times
      UK economy shrinks for first time in almost seven years
      Manufacturing output contracts while growth in services industry slows
      Valentina Romei in London
      2 hours ago

      The UK economy contracted in the second quarter for the first time in almost seven years amid rising Brexit uncertainties and weakening global growth.

      Output fell 0.2 per cent in the three months to June, worse than the flat performance expected by economists and down from a 0.5 per cent expansion in the first quarter, according to data from the Office for National Statistics. Britain’s economy has not shrunk since the final three months of 2012.
      …

    2. We’re going to see a widening yield gap ahead between the negative bond yield countries and those deemed politically risky.

      The Financial Times
      Markets Briefing Equities
      Italian financial markets shaken by political turmoil
      Gap between Italian and German debt yields widens in sign of rising concern
      Philip Georgiadis in London and Siddarth Shrikanth in Hong Kong 52 minutes ago

      Stocks fell and investors moved into the safety of government bonds on Friday, while Italian assets came under pressure as optimism was tempered by the re-emergence of political risk in Europe and fresh trade concerns.

      Traders pulled out of Italian government debt with Rome’s ruling coalition government on the verge of collapse, sending yields rocketing, while shares in the country’s banks fell sharply.
      …
      Italian two-year government bond yields rose 23 basis points to 0.286 per cent, while the yield on 10-year debt was 25bp higher, which would be its biggest daily gain since 2018. The rise in yield points to a drop in price.

      The moves meant the closely watched spread between Italian 10-year government bonds and German Bunds of the same maturity rose to as much as 2.367 percentage points, its highest level since June, suggesting that the risk premium investors place on Italian debt has risen.
      …

  9. Negative-yielding bond supply hits all-time high – J.P. Morgan
    Thursday, August 08, 2019 2:32 p.m. CDT

    NEW YORK (Reuters) – The amount of bonds carrying negative yields increased to an all-time peak of $13.2 trillion on Wednesday, up $1.6 trillion or 13.4% from a month earlier in the wake of a dramatic rally in bond markets around the world, J.P. Morgan said on Thursday.

    The amount surpassed the previous record high set in July 2016 by $484 billion, J.P. Morgan analysts said.
    …

    1. This “120 year low in interest rates” claim is bogus, because interest rates apparently predate the beginning of their stoopid chart. Try the lowest rates in 3000 years on for size.

      The chart

      Just how low are bond yields? Bank of America Merrill Lynch says by their definition—using U.K, Australia, Japanese, Swiss, French and U.S. data—global bond yields are at a 120-year low.

      Interestingly, while money is flowing out of stocks — $24.9 billion, including $12.4 billion on Monday alone—the flows of $3.6 billion into bonds was the least since Jan. 2016, according to the BAML data.
      …

      1. Simple interpretation:

        Paul Volcker’s hardnosed measures to kill dollar inflation, circa 1980, triggered a four-decades-long downtrend in long-term Treasury yields which has yet to reach bottom.

  11. A report from the Sydney Morning Herald in Australia. “A small group of private certifiers have signed off on 130 buildings with compliance problems, including allowing residents to move into one property that did not have toilets or taps fitted.

    And in other current events news today. Perfectly normal this is. Wake me up when it’s all over.

    https://www.businessinsider.com/danish-bank-offers-mortgages-at-negative-interest-rates-2019-8

    A Danish bank is offering mortgages at a 0.5% negative interest rate — meaning it is basically paying people to borrow money
    Will Martin
    17m [8/9/19]

    ‘A bank in Denmark is offering borrowers the chance to take out mortgages at a negative interest rate, effectively meaning that it will pay customers to borrow money.’

    ‘Jyske Bank, Denmark’s third-largest bank said this week that customers will now be able to take out a 10-year fixed rate mortgage with an interest rate of -0.5%.’

    ‘ “A few months ago, we would have said that this would not be possible, but we have been surprised time and time again,” Jyske Bank housing economist Mikkel Høegh said.’

    ‘Offering loans at a negative rate may seem counterintuitive [read “crazy”]. But some banks are content to take a guaranteed small loss rather than risk bigger losses.” ‘

    Perfectly normal in our bizzaro world of central bankers run amok. We’re beyond “The Emperor has no clothes” phase.

    Those crazy Danes. 🙂

    The Emperor’s New Clothes
    Hans Christian Andersen
    Fiction (?)

    So now the Emperor walked under his high canopy in the midst of the procession, through the streets of his capital; and all the people standing by, and those at the windows, cried out, “Oh! How beautiful are our Emperor’s new clothes! What a magnificent train there is to the mantle; and how gracefully the scarf hangs!” in short, no one would allow that he could not see these much-admired clothes; because, in doing so, he would have declared himself either a simpleton or unfit for his office. Certainly, none of the Emperor’s various suits, had ever made so great an impression, as these invisible ones.

    “But the Emperor has nothing at all on!” said a little child.

    “Listen to the voice of innocence!” exclaimed his father; and what the child had said was whispered from one to another.

    “But he has nothing at all on!” at last cried out all the people. The Emperor was vexed, for he knew that the people were right; but he thought the procession must go on now! And the lords of the bedchamber took greater pains than ever, to appear holding up a train, although, in reality, there was no train to hold.

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